UBER TECHNOLOGIES INC (NYSE:UBER) Fits the GARP Profile with Strong Growth and Reasonable Valuation

For investors looking to balance the search for high-growth companies with a careful view on price, the "Growth at a Reasonable Price" (GARP) method presents a useful framework. This approach seeks to find companies with solid and lasting earnings increases, but whose stock prices are not too high. It avoids the limits of only following recent price trends or searching for deeply discounted stocks, concentrating rather on good growth the market may not completely recognize. One instrument for applying this method is an "Affordable Growth" stock filter, which selects for companies with strong growth measures, good financial condition, acceptable earnings, and a valuation that seems fair.

A recent result from this filter is UBER TECHNOLOGIES INC (NYSE:UBER), the worldwide mobility and delivery platform. According to a fundamental analysis report from ChartMill, Uber receives an overall fundamental rating of 6 out of 10, with its profile showing a combination of notable growth and acceptable valuation that fits well with the GARP idea.

A Notable Growth Profile

The central principle of any growth-oriented method is, expectedly, growth. Uber is strong in this area, achieving a Growth Rating of 7. The company is not only suggesting future possibility; it is achieving notable expansion now.

• High Earnings Growth: Over the previous year, Uber's Earnings Per Share (EPS) rose by a notable 137.62%, a clear sign of the company's move toward continued earnings.
• Solid and Steady Revenue Increase: Revenue growth remains strong, rising 18.25% over the last year. More significantly, the company has kept a very solid average yearly revenue growth rate of 27.60% over recent years.
• Positive Future Expectations: Analysts believe this progress will persist, with estimated yearly EPS growth of 30.03% and revenue growth of 13.75% in the next years.

This effective mix of recent strong performance and a good forward path is exactly what growth investors look for. It shows a business that is growing efficiently and changing revenue growth into net earnings.

Valuation: Acceptable Considering the Situation

A growth narrative by itself is not enough for the GARP method; the price must be suitable. Uber's Valuation Rating of 6 implies its stock is not low-cost in simple terms, but seems acceptably priced compared to its growth expectations and similar companies. This detailed view is important to prevent paying too much for growth.

• Favorable Relative Measures: While Uber's Price/Earnings (P/E) ratio of 18.04 may appear high alone, it is priced lower than 83.7% of similar companies in the Ground Transportation sector, where the average P/E is above 56.
• Notable Growth Adjustment: The important measure for GARP investors is frequently the PEG ratio, which modifies the P/E for projected growth. Uber's low PEG ratio implies the market may not be fully accounting for its high projected earnings growth rate of over 43%, indicating a possibly acceptable valuation.
• Varied Indicators on Cash Flow: The valuation view includes both good and careful points. The company's Price/Free Cash Flow ratio is lower than 93% of its industry, a major positive. However, its Enterprise Value/EBITDA measure is higher than two-thirds of similar companies.

Supporting Fundamentals: Condition and Earnings

For growth to be lasting and the valuation to be reasonable, a company must have a stable base. Uber's ratings in Financial Health (6) and Profitability (5) are called "average" to "acceptable," giving necessary support for the growth story.

• Financial Health Positives: Uber's balance sheet displays signs of stability. Its Altman-Z score of 3.88 shows a low short-term bankruptcy danger, and it is better than 79% of its industry on this point. Also, its Debt-to-Free Cash Flow ratio of 1.36 is very good, meaning it could settle all its debt in just over a year from its cash flow, performing better than 93% of peers.
• Earnings Under Review: The company's earnings measures are getting much better. It has an industry-best Return on Assets of 26.27% and a very high Return on Equity of 59.15%. Its Profit Margin of 33.54% is higher than almost 98% of industry rivals, emphasizing a successful change toward a more profitable operation.

These elements in health and earnings are key because they reduce risk. Good financial strength lowers the chance of a money problem interrupting growth, while better earnings make sure that revenue growth becomes value for shareholders, therefore supporting the present valuation.

Summary and Additional Study

Uber Technologies illustrates the GARP investment method. The company shows the high growth traits that draw investors focused on recent trends, yet its valuation, when compared to its industry and future earnings potential, does not seem overly high. The acceptable scores in financial health and better earnings give a basic review of the risks commonly linked to high-growth narratives.

For investors wanting to review other companies that match this "Affordable Growth" profile, a prepared filter exists. You can find more results from this filtering method here.

A full review of the fundamental analysis for Uber, including all related ratios and comparisons, can be seen in the complete ChartMill Fundamental Analysis Report for UBER.

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Disclaimer: This article is for informational purposes only and does not constitute financial advice, an endorsement, or a recommendation to buy, sell, or hold any security. The analysis is based on data and ratings provided by ChartMill, and investors should conduct their own due diligence and consider their individual financial circumstances and risk tolerance before making any investment decisions.